1. Applying Appraisal Principles in Practice Felicia Nelson, AIC USDA:APHIS:VS

2. APHIS Appraisal Process Subject to Federal Regulations and VS Memorandums  CFRs on the web (Title 9, Parts 50-56)  http://www.access.gpo.gov/nara/cfr/cfr-table- search.html#page1 http://www.access.gpo.gov/nara/cfr/cfr-table- search.html#page1 http://www.access.gpo.gov/nara/cfr/cfr-table- search.html#page1  VS Memos on the Web (No. 534.1)  http://inside.aphis.usda.gov/vs/downloads/memos/ 534_1.pdf http://inside.aphis.usda.gov/vs/downloads/memos/ 534_1.pdf http://inside.aphis.usda.gov/vs/downloads/memos/ 534_1.pdf  Includes guidelines for private appraisers  Updated guidelines for private appraisers as well as poultry values  http://inside.aphis.usda.gov/cei

3. APHIS Appraisal Process According to USDA-OGC the appraisal process is NOT a series of negotiations between USDA and the owner, nor is any contract implied during discussion with owner  However, best not to use the word “offer” which can imply a contract  Better to use the word “proposed” or “proposal” and any values discussed must be approved by higher level officials  Make clear up front to the owner no contract is implied  Have contract when VS Form 1-23 is signed by all parties A fair offer based upon relevant information is what is desired

4. APHIS Appraisal Process The owner will claim above average quality animals, thus deserve above average compensation  Owners need to document above average quality Let the owner tell his story, especially in whole herd/flock depopulations  Identify top quality within the herd & owner’s valuation  Identify average quality within the herd & owner’s valuation  Identify bottom quality within the herd & owner’s valuation

5. APHIS Appraisal Process Work with the owner to document quality / value  Good cop / bad cop routine  You’re the good guy gathering information to convince the evil “bean counter” in Fort Collins that the owner has high valued animals  Includes both production and financial records  Receipts of sales and purchases  It is a “red flag” when owners either claim they don’t have or are unwilling to share their records and yet claim high value animals

6. APHIS Appraisal Process Locate relevant markets for quality/type of animals, may not be the local auction  Owner can help with this Analyze market prices of comparable (similar quality) animals to determine appraisal value  It is very important to document how you arrived at your values in order to pass any OIG audits

7. APHIS Indemnity Process Once value has been determined, calculate indemnity  Indemnity = appraisal value x indemnity rate (%)  Sometimes there is a maximum payment limit

8. Example of Appraisal

15. APHIS Indemnity Process Present appraisal value & indemnity amount to owner on VS Form 1-23   http://inside.aphis.usda.gov/vs/downloads/vs- form1-23.pdf   Use correct version: Apr 2002   If indemnity rate is less than 100%, show the full appraisal value, not the indemnity value in the appraisal columns. Otherwise owner may feel his animals were not properly appraised. Once signed, send to Regional Office  Regional Epidemiologist can help with this (more later)

16. If the Owner Refuses to Sign Remind the owner that USDA assumes healthy animals and thus there is a high probability he will receive more than what he could earn in trying to sell diseased or exposed animals at a market Can the owner document and justify additional value?  If there appears to be a reasonable justification / additional documentation, then USDA can reappraise the animals  Otherwise formal appeal to VS Deputy Administrator, which is final  Remind the owner that current federal law prohibits APHIS being sued on its valuation

17. Appraiser-to-Owner Experience Owner's Records Owner's Memory Owner's Acceptance

18. Your experience determining dairy values with limited cow data Available data  Lactation  Date bred or due  Average daily milk produced  Normal days dried off Extrapolated data  Days carried calf  Days in milk  Annual milk production